7 images that best demonstrates
Coca-Cola’s effective use of the extended marketing mix

Pricing Strategy

Overview of Coca-Cola’s pricing strategy

The pricing strategy is an important element in a marketing mix as this decision affects the revenue and has a valuable impact on the brand’s equity, Coca-Cola aim to offer a premium brand at an affordable price. Coca-Cola’s pricing strategy is competition based, three key elements they focus on are competitive pricing and keeping Coca-Cola the same level as their competition, “Coca Cola items meet the opposition against significant players like Pepsi, items valuing is set around a similar level of rivalry.” [1] (Shaskank, J, 2017), offering cheaper low-calorie alternatives such as Diet Coke and Coca-Cola Zero and offering a range of packages and size’s at different prices, the more you buy the less you pay which is economic for Coca-Cola. According to Coca-Cola European partners, “Sales of larger pack formats have increased in recent weeks, as shoppers want volume and good value for money” [2] (Coca-Cola European partners, 2020).

Coca-Cola’s effectiveness of their pricing strategy

Coca-Cola’s pricing strategy is successful due to their products being based on “values such as joy and happiness in a bottle, the message that when consumers open a bottle of Coca-Cola, they are really opening a good feeling, happiness that can be drunk out of a bottle.” [3] (Brite, 2018) The premium brand and low cost allows Coca-Cola to successfully obtain strong consumer relationships as the consumer feels they are getting greater value for money. According to Coca-Cola Great Britain, “More than 1.9 billion servings of Coca-Cola are enjoyed in more than 200 countries each day.” [4] (Coca-Cola Great Britain, 2020)

Coca-Cola maintains successful competitive pricing by reducing the cost of overheads and using technology within their bottling partners they do this through outsourcing the production of bottling products, it is important for the cost of producing Coca-Colas to be low to allow them to focus their money on raising brand awareness and giving movement on price. Forbes states, “The slower rise in expense levels is expected to lead to a rise in net income margin from 20.2% in 2018 to 22% in 2020.” [5] (forbes, 2019) “Coca-Cola’s products are available in various packages suited to various types of needs from 500ml to large 2 and 2.5 litre family packs. Larger packs mean higher savings.” [6] (Pratap, A, 2019) The variety in packaging allows Coca-Cola to meet the needs of all market demographics as their products come in a variety of different price ranges to meet every customer’s needs.

When sugar tax was introduced in 2014 Coca-Cola made the decision to reduce the size of the packaging for the original formula to comply with new rules implement on certain ml’s, ensuring the consumer wasn’t disadvantage due to the implementation of sugar tax. According to Coca-Cola Great Britain, “We have decided to increase the size of the 1.75L bottle of Coca-Cola Zero Sugar and Diet Coke to 2L, so our zero sugar alternatives are even better value for people. We hope this will encourage more Coca-Cola drinkers to try one of our no sugar colas.” [7] (Coca-Cola Great Britain, 2020)

The evolution of Coca-Cola’ pricing strategy

Coca-Cola’s pricing strategy is ever-evolving, their pricing was originally a cost-based strategy where the cost of Coca-Cola products was based on ingredients costs, capital expenses, and operational costs. “Coca-Cola only cost five cents for a 6.5-ounce glass or bottle between the years of 1886 and 1959.” [8] (Watson, C, n.d) This strategy allowed Coca-Cola to infiltrate the market and gain loyal consumers. 

Since the launch of Coca-Colas competitor, Pepsi, they have moved to competition-based pricing by using market research technologies to allow them to stay in line and stay affordable. Coca-Cola’s pricing has always been based on being in the customer’s price range, not too low to be classed as low quality, Coca-Cola uses numerous tactics to position their selves by utilising different packaging and sizes, but the marketing strategy still focuses on an affordable premium product. [9] (Lumen, n.d)

Conclusion

In conclusion, Coca-Cola’s pricing strategy is successful because they are seen as an affordable yet premium product across the globe. They have developed pricing strategies that enable them to cater to every consumer, such as competitive pricing as well as offering various package sizes that tend to be cheaper the larger the volume purchased. This approach further confirms Coca-Cola as a market-leading premium brand that is available to everyone.

Reference list

Image 1 – Liberty Coca-Cola Beverages (n.d) Coca-Cola’s range of products [online]. Available at: http://www.libertycoke.com/ [Accessed 16 January 2021].

Image 2 – K. Duggan (2018) Coca-Cola’s range [online]. Available at: https://www.checkout.ie/a-brands/coca-cola-reconfigures-range-sugar-tax-56005 [Accessed 23 January 2021]

Image 3 –Coca-Cola Company (n.d) Coca-Cola distribution system diagram [online]. Available at: https://www.coca-colacompany.com/company/coca-cola-system [Accessed 17 January 2021]

Image 4 – Digital agency Network (n.d) Coca-Cola ‘taste the feeling’ advert [online]. Available at: https://digitalagencynetwork.com/coca-colas-new-marketing-strategy-taste-the-feeling/ [Accessed 17 January 2021]

Image 5 – Coca-Cola Company (n.d) Coca-Cola’s key brand values [online]. Available at: https://www.coca-colacompany.com/careers/why-work-at-the-coca-cola-company [Accessed 19 January 2021]

Image 6 – P. Fogarty (2020) Coca-Cola bottles [online]. Available at: https://www.hitc.com/en-gb/2020/10/23/coca-cola-company-200-drinks-coke-brands-being-cancelled-list/ [Accessed 24 January 2021]

Image 7 – Coca-Cola Company (n.d) Local bottlers [online]. Available at: https://www.coca-colacompany.com/company [Accessed 20 January 2021]

[1] Shaskank, J. (2017) ‘Coca Cola Pricing Stategy’ LinkedIn [online]. Available at: https://www.linkedin.com/pulse/coca-cola-pricing-strategy-shashank-jindal [accessed 4 February 2021]

[2] Anon. (2020) ‘New range of Coca-Cola price-marked packs’ Coca-Cola European Partners [online]. Available at: https://www.cocacolaep.com/gb/news/2020/new-range-of-coca-cola-price-marked-packs/. [accessed 4 February 2021]

[3] Anon. (2018) ‘Coca Cola: Happiness in a Bottle’ Brite [online]. Available at: http://straightupvc.org/coca-cola-happiness-in-a-bottle/ [accessed 1 February 2021]

[4] Anon. (n.d) ‘How many drinks does The Coca‑Cola Company sell worldwide each day?’ Coca-Cola Great Britain [online]. Available at: https://www.coca-cola.co.uk/our-business/faqs/how-many-cans-of-coca-cola-are-sold-worldwide-in-a-day#:~:text=worldwide%20each%20day%3F-,How%20many%20drinks%20does%20The%20Coca%E2%80%91Cola%20Company%2[accessed 1 February 2021]

[5] Anon. (2019) ‘How Does Coca-Cola Spend Its Money?’ Forbes [online]. Available at: https://www.forbes.com/sites/greatspeculations/2019/09/30/how-does-coca-cola-spend-its-money/?sh=56e9e38b50ab. [accessed 2 February 2021]

[6] Pratap, A. (2019) ‘Coca Cola Sources of Competitive Advantage’ Notesmatic [online]. Available at: https://notesmatic.com/2019/01/coca-cola-sources-of-competitive-advantage/#a4 [accessed 31 January 2021]

[7] Anon. (2020) ‘Why has the size of a 1.75L bottle of Coca‑Cola Classic moved to 1.5L?’ Coca-Cola Great Britain [online]. Available at: https://www.coca-cola.co.uk/our-business/faqs/why-have-the-175L-bottles-shrunk. [accessed 31 January 2021]

[8] Watson, C. (n.d) ‘How Much Did Coca Cola Cost When It First Came Out? REALLY’ Sodapopcraft.com [online]. Available at: https://sodapopcraft.com/how-much-did-coca-cola-cost-when-it-first-came-out/. [accessed 1 February 2021]

[9] Anon. (n.d) ‘Putting It Together: Marketing Mix’ Lumen [online]. Available at: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/putting-it-together-marketing-mix/. [accessed 2 February 2021]